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Steel pensions: Mis-selling scandal 'already erupting'

Steel pensions: Mis-selling scandal 'already erupting'
From BBC - February 14, 2018

Another major financial mis-selling scandal is "already erupting" according to a report by MPs into British Steel's pension scheme.

Members were exploited by "vulture" financial advisors and "apparently neglected" by government, Tata Steel and regulators, said the Work and Pensions Select Committee.

The UK government has yet to issue its response to the "neglect" claim.

The Pensions Regulator said it would continue to work to protect savers.

The British Steel Pension Scheme (BSPS) was closed after regulators accepted that Tata Steel UK would be insolvent if it continued to sponsor it.

It had a membership of 124,000 current and retired steelworkers and pension obligations of 14bn.

About 8,000 people are employed by Tata across England and Wales, including 3,500 in Port Talbot.

Members had to decide what to do with their pensions after the scheme was separated from Tata last September.

Between October and December 2017, they had a choice of entering into a new Tata-backed scheme, BSPS2, or the Pension Protection Fund (PPF).

Both were less generous than the scheme that closed but BSPS2 was better for the majority of people than the PPF.

A third option was transferring out of the scheme completely - a so-called DB transfer - but the committee said this is "not usually in someone's interests".

But circumstances surrounding the BSPS "created perfect conditions for vultures to take advantage", the MPs concluded.

One Tata worker told the BBC he lost almost 200,000 by transferring out of the BSPS after seeking independent financial advice.

The committee noted that an outline plan to save Tata Steel UK, the "sponsor" of the BSPS, had been in place since May 2017.

But it said those signatories to the deal - Tata, the UK government and Pensions Regulator - had neglected the pension scheme's members.

Committee chairman Frank Field said: "Once again we find the pensions regulator fiddling while Rome burns, when it should have seen this rip-off coming."

He added: "All the responsible authorities must act, now, to stop more people being cheated."

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